West Palm Beach Business Litigation Lawyer

We represent people and businesses in a wide variety of business and commercial disputes and lawsuits. Rabin Kammerer Johnson attorneys have extensive experience litigating cases involving breaches of contract, enforcement of non-competition agreements, trade secret and intellectual property violations, shareholder and partnership disputes, employment claims, court-appointed receiverships, bankruptcy adversary proceedings, business torts, real estate disputes, and many other business-related legal problems.

If you are searching for a West Palm Beach business litigation lawyer to handle your business litigation matter, three things set us apart:

First, Adam Rabin is Board Certified in Business Litigation by the Florida Bar. This is the highest recognition that can be given by the Florida Bar for proficiency and skill within a given area of the law. This certification requires experience, peer review, and testing.

Second, we try cases. Because the vast majority of business litigation cases result in settlement, many experienced business litigators advance well into their careers without having actually tried very many cases before a jury. This is not the case at Rabin Kammerer Johnson. We have real trial experience that is recognized and respected by our adversaries.

Third, we handle our cases efficiently and economically. We are a small boutique firm. At Rabin Kammerer Johnson, you are not paying for waterfront views or ridiculous overhead. You are paying for efficient, skilled, business litigators. We regularly face and defeat lawyers from “bigger” law firms who have racked up legal bills far greater than ours.

Our highly skilled and knowledgeable Florida business litigation & copyright attorneys will represent your individual or company’s interests effectively and efficiently with a strategic plan tailored to your specific needs, whether it is taking the case to trial or making a business decision to settle the case. Read on for more information around these areas of law or contact our firm today at 561-659-7878 or use our online contact form.

Florida Business Law, Copyright & Trademark FAQs

When are conflict-of-interest transactions permitted under the Florida Revised LLC Act?

Section 605.04092, Florida Statutes, as revised, governs conflict of interest transactions involving LLC managers or members. The key is that if a transaction is deemed “fair to the LLC,” it is not subject to a claim for damages or equitable remedies. The fairness requirement still applies regardless of whether the LLC’s disinterested members or managers approve the transaction.

Proving Fairness

To prove a member or manager’s transaction is unfair to the LLC, the claimant has the burden of proof. The transaction may be deemed unfair if one of the following conditions did not occur:

In a manager-managed LLC, the interest in the transaction was disclosed or known by managers who voted on it, and the transaction was approved by a majority of disinterested managers, even if these managers constituted less than a quorum, as long as the decision was not approved by just one manager;
In a member-managed LLC or a manager-managed LLC in which the managers failed to do as stated above, the material facts of the transaction and interest was disclosed or known by members who voted upon the transaction, and the transaction was approved by a majority of disinterested managers, even if these managers constituted less than a quorum, as long as the decision was not approved by just one manager.

If neither of the above conditions is satisfied, the burden of proof will shift to the party defending the validity of the transaction to affirmatively prove the transaction was fair.

A transaction is “fair to the limited liability company” if the transaction, as a whole, is beneficial to the LLC and its members. When consider whether the transaction is beneficial, consideration is given to whether the transaction is:

Fair in terms of the member’s or manager’s dealing with the LLC in connection with that transaction, and
Comparable to what might have been obtained in an arm’s-length transaction.

What is a Manager or Member’s Indirect Material Financial Interest in a Transaction?

Another way to prove a transaction is unfair to an LLC is to show that a member or manager has an “indirect material financial interest” in the transaction. The revised LLC statute clarifies that an “indirect material financial interest” means whether a transaction is “fair to the limited liability company,” and when a member or manager is “indirectly a party” to a transaction.

A person is indirectly a party if that person has a material financial interest in, or is a director, officer, member, manager, or partner of a person, other than the LLC, who is a party to the transaction. Likewise, a member or manager also has an “indirect material financial interest” if a spouse or other family member has a material financial interest in the transaction, or if the transaction is with an entity that has a material financial interest in the transaction and is controlled by the member or manager.

Under the Florida Revised LLC Act, when must an LLC make its records available for member review?

A. Who Has the Right to Access an LLC’s Records?

The members of a member-managed LLC are entitled to unfettered access to specific LLC records. In addition, an LLC must provide to members documents or information that is considered material to a member’s rights or duties set by the statute or the LLC’s operating agreement.

Likewise, managers have the similar rights to obtain documents and information in a manager-managed LLC. While a demand is not required to obtain certain records, when a member makes a demand the member must identify the records sought with reasonable particularity and describe the need for the request.

There is a key difference between manager-managed and member-managed LLC’s when it comes to receiving “other” information from the LLC. In the former, the information sought must be “reasonably related to the member’s interest as a member.” In the latter, the information requested only must be “material to” the duties or rights of the member.

A former member also is entitled to receive information from the LLC if the information is sought in good faith for the period in which the requesting party was a member.

When producing records, the LLC may designate information as confidential and impose nondisclosure restrictions requirements. If a dispute arises over the conditions imposed, the LLC has the burden to prove the reasonableness of the conditions.

B. Under What Circumstances May a Court Require an LLC to Produce its Company Records?

A court may order inspection and copying of the LLC’s records at the LLC’s expense. Moreover, reasonable attorneys’ fees of the member will be borne by the LLC, unless the LLC can prove that it declined inspection in good faith based on a reasonable basis for doubt to provide the information requested. Likewise, the court may impose reasonable restrictions on the use or distribution of the information requested that the LLC must produce.

What is a fiduciary duty?

A fiduciary relationship arises when a person assumes a position of trust where one person has discretionary power over the interest of another. A fiduciary is expected to act with trust and confidence and to act with scrupulous good faith and candor towards a dependent party to whom the fiduciary owes his or her duty.

A concept of a fiduciary duty was originally a flexible equitable concept that arose to provide relief when no legal remedy was available. The core duty of a fiduciary is the duty of loyalty. This requires the fiduciary to put the interests of the beneficiary first and not to manipulate the relationship for the fiduciary’s personal benefit. This prevents the fiduciary from self-dealing, creating conflicts of interest, and withholding disclosure of material facts.

One of the more famous quotes that describes the extent of a fiduciary duty comes from the late U.S. Supreme Court Benjamin Cardozo, who was then serving as a judge on the New York Court of Appeals. Judge Cardozo described a fiduciary duty as “Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.”

A fiduciary owes a duty of care to execute his or her duties in an informed manner and to act as an ordinary prudent person. If the fiduciary has special skills, he or she is under a duty to use those skills.

A fiduciary duty may be created by contract when the parties agree to a fiduciary relationship. This includes the attorney-client or agent-principal relationship. Florida statutes also expressly impose a fiduciary in several contexts including: broker-client, trustee-beneficiary, guardian-ward, director-corporation, among others.

In sum, a fiduciary duty is often created based upon the nature of the parties’ relationship and may create a cause of action for breach when the fiduciary does not strictly adhere to acting in the best interest of the dependent party.

What are the elements of fraud?

Many people believe they have been defrauded in a business or consumer transaction.

Fraud, however, has a very specific and narrow meaning under the law. To bring an action for fraud in Florida, a victim must be able to prove the following elements.

First, the victim must prove that the defendant intentionally made a misrepresentation of material fact to the victim. A misrepresentation is a false statement, in other words, a lie. Note that the misrepresentation must be material. This means that the misrepresentation must affect something important to the transaction, not a trivial or minor point.

Mere statements of opinion do not normally qualify as misrepresentations. Likewise, a mere promise to do something in the future does not qualify as a misrepresentation, unless the victim can prove that, at the time the defendant made the promise, he or she had no intention to follow through on that promise.

Also, the law recognizes that telling half the truth can be the same as a telling a lie. This is called an omission. If a defendant conceals important information from the victim, for example, this can be the same as making a material misrepresentation to the victim.

Second, the victim must prove that the defendant intended that the victim would rely upon the false statement of material fact or omission.

Third, the victim must show that he or she reasonably relied on the misrepresentation. Note that the victim’s reliance must be reasonable. A victim cannot may not rely on a false statement if he or she knew the statement was false or if its falsity was obvious to the victim.

Finally, the victim must show that, as a result of his or her reliance on the misrepresentation or omission, the victim was actually damaged and suffered a harm. As a general rule, fraud that does not result in damage is not actionable.

What is a breach of the implied covenant?

The law recognizes that contracts do not contain only the expressed terms that are written in them but there are also some implied terms, and specifically every contract carries with it an implied covenant of good faith. That means where the contract gives one party discretion to do something or not to do something, the law implies that the party is going to exercise good faith in doing that.

For example, if a lease has a renewal provision, the landlord has the discretion of whether or not to renew it. The law implies that the landlord is going to exercise that discretion in good faith and within the commercially reasonable expectations of the parties. The landlord cannot act arbitrarily or capriciously. If the lease is not renewed, there has to be a legitimate good faith business reason for that.

What is a non-compete agreement ?

A non-compete agreement is a provision that usually appears in an employment contract between an employee and an employer. In basic terms, a non-compete clause requires an employee, in exchange for being hired, to give up his or her rights to go to work for a competing business or company for a given period of time after the employee leaves his or her current job. Non-compete clauses can serve a valuable purpose in many businesses and industries. No business wants to hire an employee who learns all of the company’s methods and practices, develops relationships with all of the company’s key customers, and then quits to go to work for a competitor across the street.

On the other hand, non-compete clauses can be abused by employers. Most employees have very little negotiating power at the time they are hired, and they have no choice but to agree to the non-compete clause if they want the job. Later, when the job does not go well, the employee discovers that he or she may need to move out of town to find another job in the same industry or field. This is why non-compete clauses often lead to lawsuits.

Non-compete clauses are governed by Florida statute, and they are not always enforceable. To be enforceable, a non-compete clause must meet two tests.

First, the employer must have a legitimate business interest in enforcing the non-compete agreement. Typical examples might include protecting existing customer relationships or protecting business trade secrets or confidential information.

Second, the non-compete agreement must be reasonable in duration and scope. Duration means the amount of time that it covers, i.e., one year, five years, etc. Scope means the geographic area that it covers, i.e., the city, the county, the whole state, etc. Whether a given non-compete agreement passes this two-part test will depend on the specific facts and circumstance of the business and industry.

What is a non-solicitation agreement?

A non-solicitation agreement is a contract, usually between an employer and an employee that governs the employee’s right to solicit customers of the business after he or she leaves his or her employment. The employee must usually agree not to solicit customers for a given period of time after the employee leaves his or her current job.

The word solicit can have a broad meaning under the law. As a general rule, it means contacting customers to persuade the customer to do business with a new, different or competing firm.

Non-solicitation agreements can serve a valuable purposes for many businesses. As an example, many businesses spend time, money and resources to build their customer base and customer list, and they invest substantial assets to keep their customer list confidential. Such employers may wish to prevent employees from gaining access to the customer list, quitting their jobs, and then soliciting those customers on behalf of a new or competing business.

Non-solicitation agreements are not always enforceable, however. In Florida, a non-solicitation agreement must generally satisfy two two tests.

First, the employer must have a legitimate business interest in enforcing the non-solicitation agreement. Typical examples might include protecting existing customer relationships or protecting business trade secrets or confidential information.

Second, the non-solicitation agreement must be reasonable in duration and scope. Duration means the amount of time that it covers, i.e., one year, five years, etc. Scope means the geographic area that it covers, i.e., the city, the county, the whole state, etc.

Whether a given non-solicitation agreement passes this two-part test will depend on the specific facts and circumstance of the business and industry.

If you believe you have a dispute regarding a non-solicitation agreement, contact one of our attorneys.

What does tortious interference with a business relationship or contract mean?

Florida law recognizes that an existing contractual or business relationship can be a valuable asset to the parties involved in that relationship. Thus, when an outsider to the contract or business relationship takes steps to spoil the relationship or interfere with the contract, the law allows a remedy. In particular, a victim can bring a claim for tortious interference with contractual or business relations.

To prove a claim for tortious interference with a contractual or business relations under Florida law, a victim must generally prove the following:

(1) the existence of an enforceable contract or ongoing business relationship,

(2) the defendant’s knowledge of that contract or relationship,

(3) an intentional and unjustified interference by the defendant with the victim’s rights under the contract or relationship, and

(4) resulting damages.

As a general rule, there is no cause of action for interference that is merely negligent. The defendant’s interference must be intentional to give rise to a legal claim under this theory.

Not all conduct that interferes with another party’s contractual or business relations is improper,
however. The law recognizes several defenses to this type of legal claim. The most common of these defenses is known as qualified privilege. This means that certain types of people and businesses have a qualified or limited privilege to interfere with the contractual relations of other people or businesses under certain circumstances.

As an example, the law recognizes a limited privilege for persons or businesses to protect their own pre-existing
legal rights or financial interests. The law also recognizes a limited privilege to engage in lawful competition. These privileges are not absolute, and they are subject to many exceptions. Whether a given privilege applies will depend upon the facts and circumstances of each case.

What is fraudulent inducement?

Fraudulent inducement is a type of legal claim often raised when a person has been tricked or defrauded into entering into a contract or transaction.

To establish a claim of fraudulent inducement, a victim must generally prove the following:

First, the fraudster made a misrepresentation of fact that was material
to the transaction.

Second, the fraudster knew that the misrepresentation was false.

Third, the fraudster made the misrepresentation to persuade the victim to agree to the transaction or contract.

Fourth, the victim relied on the misrepresentation.

Fifth, the victim would not have agreed to the contract or transaction if he or she had known the truth.

As a general rule, a victim cannot rely on a false statement if he or she knew it was false or if its falsity was obvious. Also, mere statements of opinion are usually insufficient to constitute fraud.

As an example of fraudulent inducement, imagine that a customer walks on to a used car lot to purchase a car. The salesman shows the customer a used vehicle and tells the customer that the vehicle has only 50,000 miles on the odometer. The customer buys the car. Later, the customer discovers that the vehicle actually had 100,000 miles, and the odometer has been altered. In such a case, the customer was fraudulently induced to enter into a contract to buy the car.

What kinds of damages can be awarded in a breach of contract lawsuit?

As a general rule, the victim of a breach of contract is entitled to recover compensatory damages. This means the amount of money that would put the victim in the financial position he or she would have occupied had the contract not been breached.

There are two rules for measuring compensatory damages.

The first is called the expectation or benefit-of-the-bargain rule. Under this rule, damages are measured by the benefits the victim expected to receive upon successful completion of the contract. These damages often take the form of lost profits caused by the breach. Lost profits can be difficult to prove and may require the assistance of an expert witness such as a forensic accountant.

In many cases, expectation damages are impossible to calculate. The law therefore recognizes a second measurement of damages, called reliance damages. In contrast to expectation damages, the purpose of reliance damages is to return the victim to the financial position he or she occupied before making the contact. Reliance damages might include out-of-pocket expenses incurred by the victim in performing his or her side of the contract. The goal is to compensate the victim for the harm caused by the breach.

The victim of a breach of contract almost always has a duty to mitigate damages. This means the victim must take reasonable steps to prevent or minimize damages, once the victim knows the contract has been breached. The breaching party will not normally be required to pay damages the victim could have avoided with reasonable efforts.

What are liquidated damages?

The victim of a breach of contract, in many circumstances, is entitled to recover damages caused by the breaching party. Determining the proper amount of damages can be a difficult and expensive exercise. For that reason, the law allows the parties to a contract to agree, ahead of time, what the damages will be in the event of a breach. These are called “liquidated damages.” They are sums that contracting parties agree to pay as damages, if they fail to perform under the contract.

As an example, an employee might agree to a non-solicitation agreement, under which, the employee agrees that, in the event he or she leaves the current job, he or she will not solicit the company’s customers. In the event the employee breaches the contract, he or she agrees to pay X amount of dollars in damages for every act of solicitation. These would be liquidated damages.

Liquidated damages are not always enforceable however. As a general rule, a court will not enforce a liquidated damages provision that amounts to nothing more than a mere penalty for violating the contract. The purpose of liquidated damages is not to allow parties to impose penalties upon one another. The purpose is to allow them to save time and money by agreeing, ahead of time, to good faith and reasonable estimates of likely damages in the event of a breach.

To determine whether the provision constitutes an unlawful penalty, courts look to several factors, including:

the intent of the parties in entering into the contract;
whether the agreed amount is reasonable and bears some relationship to the actual damages suffered;
whether the agreed amount is disproportionate to the actual damages suffered; and
whether the actual damages are difficult to ascertain.

If the liquidated damages provision is construed as a penalty, it may not be enforceable.

What is piercing the corporate veil?

Piercing the corporate veil is a theory under the law that allows somebody, a plaintiff, to pierce through a corporation. The classic example, maybe the corporation that owes you money doesn’t have any money, but there’s someone standing behind that corporation, maybe an owner or another company that does have money. The plaintiff wants to pierce through the first corporation and get to the money behind that corporation.

The law allows that to happen in limited circumstances. Basically, you have to show, number one, that the pierced company, the one standing in the front, is controlled or is the alter ego of the person standing behind, the person with the real money. Secondly, you’ve got to show that the person with the money was using this pierced corporation for fraud or for improper purposes. Finally, you have to show that all of these resulted in damage to the plaintiff, which we frequently can show.

Piercing the corporate veil is a powerful tool applied in limited circumstances, but it allows the person to get to where the money really is.

What are the elements of a contract?

The elements of a contract, there are three. First, you have to have a valid contract in place. That means one side has made an offer and the other side has accepted an offer. That could be in writing but it doesn’t necessarily have to be in writing. Many contracts can be verbal or oral.

The second element is that there’s been a breach. That means that one side or the other has violated the terms of whatever they agreed to.

The third element is damages. That means somebody has been harmed as a result of that breach. If all three elements are satisfied, that is valid contract, a breach and damages, then the victim may have a cause of action for breach of contract.

Are handshake agreements binding?

As a general rule, the law does not require most agreements to be reduced to writing to be enforceable. A verbal contract or a handshake deal may be just as enforceable as a written contract. Verbal or handshake agreements are subject to the same contract principles that apply to written contracts.

There are several important exceptions to this rule, however. Many states have adopted a statute of frauds that requires certain types of contracts to be in writing in order to be enforceable. In most states, the written contract must include the signature of the person sought to be bound by the contract. While the specifics may vary from state to state, most statutes of frauds require the following types of contracts to be in writing:

A promise to pay the debt of another person,
Any contract that involves the sale, disposition or transfer of real estate, including leases, and
Any agreement that cannot be performed within one year.

Again, contract law varies from state to state. To determine whether a given verbal contract or handshake deal can be enforced, you should consult a lawyer who is familiar with the contract law of the state in which you live.

Finally, while verbal contracts and handshake deals may be enforceable, lawyers do not normally advise their clients to do business this way. Written contracts are usually far better because they provide the parties with certainty as to the exact terms of the agreement. More importantly, written contracts help prevent dishonest or unscrupulous parties from later claiming the terms were different.

What is a breach of contract?

As a general rule, a contract is an agreement or a set of promises exchanged between two parties, which the law will enforce and recognize as valid. Not all promises rise to the level of a valid and enforceable contract. While contract law differs from state to state, most states recognize the basic elements of a contract to be (1) an offer, (2) an acceptance, and (3) anexchange of consideration between the parties. This means the parties must manifest their intent to be bound by the promise and they must each agree to perform or do some specific thing called for by the agreement.

When one of the parties fails to perform his or her end of the bargain, this is called a breach of contract. A breach can arise in numerous and various ways. A breach might consist of failing to perform an act required to be performed under the contract, for example, failing to make a car payment called for by a loan agreement. It might also consist of rendering deficient or defective service called for by contract, for example, a painter who paints a house the wrong color.

When a person has been victimized by a breach of contract, he or she has a legal claim or cause of action for breach of contract. Generally, a victim must prove the following elements to prevail in such a claim:

the existence of a valid and enforceable contract between the parties;
a breach of the contract; and
damages resulting from the breach.

A defendant who has been sued for breach of contract may have a variety of available defenses. The defendant may dispute that one or more of the above three elements have been properly satisfied. Even if the above elements have been satisfied, moreover, the defendant may be able to argue that he or she has a legal excuse for not performing under the contract. The law recognizes many such excuses to perform.

If you believe you have a breach of contract issue, you should contact an attorney with knowledge about the contract law in your state.

Are all oral contracts valid?

The short answer is no.

Generally, oral contracts will be enforced, so long as the basic elements of a contract are present: an offer, an acceptance, an exchange of consideration, and a meeting of the minds on the specific terms of a contract. Non-essential terms of the contract need not be settled to render an oral contract enforceable. A promise by one party to another may be enough to satisfy the requirement of consideration.

The general rule is, however, subsumed by exceptions. In most jurisdictions, the statue of frauds requires that certain contracts must always be in writing. These statutes are based on a 17th century English law entitled An Act for the Prevention of Frauds and Perjuries. Though the English statute has since been repealed, most every state has adopted similar laws, either through statute or through common law. The point of the statute was to avoid fraud in high-stakes situations, whereby one party denies the existence of a valid oral contract, or conversely, fabricates a non-existent oral contract.

Examples of contracts that are often required to be in writing, depending on the jurisdiction, include:prenuptial agreements; contracts for the purchase or sale of land; contracts by the executor of a will to pay the debt of an estate; guaranty contracts or other promises to pay debts of others; and contracts that cannot be performed within the span of one year. In Florida, a subscription for a newspaper or magazine is unenforceable unless it is in writing.

States may have other exceptions to the general rule that an oral contract is enforceable. Florida, for instance, does not generally permit an oral contract to rescind or cancel a written contract. To rescind or terminate a written contract, the parties must execute a subsequent written agreement, though exceptions to this rule exist.

What is consideration?

In most states, a contract will not be recognized as valid and enforceable unless it includes an exchange of consideration between the parties. Consideration can be defined as a right, interest, or benefit that one party in the contract gives to the other party. This is sometimes referred to as the quid pro quo. The exchange of consideration induces or motivates each party to enter into the contract.

Without an exchange of consideration, a promise may not be enforceable. If a neighbor promises to give you his car for free, for example, this promise will generally not be enforceable because it lacks consideration. If a neighbor offers to sell you his car for $1,000, on the other hand, your delivery of the money constitutes consideration to make the contract valid and enforceable.

Consideration may consist of a promise to do a certain act or thing, for example, to pay a sum of money or to deliver certain goods or services. Consideration might also consist of a promise not to do a certain act or thing that the party otherwise has a lawful right to do, for example, to go to work for a competitor company or to bring a lawsuit to redress some grievance.

Consideration must normally have a value, although the value need not be measured in monetary terms. A promise to do something in the future may constitute valid consideration. However, past consideration is generally not sufficient to support a contract. In other words, the law will not normally uphold a contract where the only consideration is some past act or service that was already performed and/or delivered for free.

What is a trademark?

A “trademark” is a name, symbol, smell or sound used to identify goods that may be natural, manufactured, or produced and are sold, transported or distributed through interstate commerce.

The two types of marks that can be registered with the United States Trademark Office are:

Trademarks – used by their owners to identify goods; and
Service marks – used by their owners to identify services or intangible activities.

Some examples of well-known trademarks are: Google, Microsoft, McDonalds,Walmart, Coca-Cola, Bank of America, GE, and Apple.

When selecting a trademark for a new company or product, an owner is encouraged to select a “strong” mark. There are four types of marks that the law recognizes in order of strength:

An arbitrary or fanciful mark;
A suggestive mark;
A descriptive mark; and
A generic mark.

With some limited exceptions for when a descriptive mark achieves secondary meaning in the marketplace, only the first two categories are protectible under the law. As such, the party selecting the name should be conscious to pick a name that is likely to receive protection and one in which an infringer may be stopped from using the same or a similar mark.

What is the difference between a registered and unregistered trademark?

An important means to protect a person or company’s trademark is by registering the name as a trademark with the United States Patent and Trademark Office. (USPTO). Trademarks can be names of products, services, logos, slogans, symbols, packaging, smells and sounds. Indeed, a trademark can be virtually any mark used to identify a particular product or service.

Registration of a trademark is analogous to how a deed works to prove ownership of real property. The registration guarantees the registrant’s exclusive right to use the trademark and a registration, therefore, gives a trademark certain legal presumptions of ownership and strength under the law. Strength of a mark involves how recognizable the mark is in the marketplace and is an important factor in proving trademark infringement against a defendant.

A trademark registration is considered direct and prima facie evidence of exclusive ownership. It enables the registrant to more easily fend off a challenge to the ownership or prior use of a trademark because it shifts the burden to the party contesting the owner’s registration.

A federal registration, however, is not required to own a trademark. A party that uses a particular name for a company or product also has certain common rights to use a trademark, but common law rights do not carry the presumptive rights for nationwide use that come with a federal registration. It, therefore, is recommended that any trademark with value, or potential value, be registered with the USPTO.

What is trademark infringement?

Trademark infringement occurs when a party uses the same or a similar trademark that another party already has the prior rights to use. The key factors that a party whose trademark is being improperly used by another must show are as follows:

First, the party with the claim must show that he or she has priority. That means he or she was using the mark in commerce before the other party. Second, the party with the claim must show the other party’s use of the same or a similar mark is likely to cause consumer confusion. Some examples of factors that may show a likelihood of consumer confusion are:

The type and strength of the claiming party’s mark, including how distinctive it is.
Similarity of the parties’ marks.
Similarity of the products the marks represent.
Similarity of the parties’ customers.
Similarity of the parties’ advertising media.
Defendant’s intent.
Instances of actual confusion.

Notably, to bring a claim against a party for trademark infringement, the party improperly using the mark does not need to be a competitor of the suing party. It is only required that the party’s improper use is likely to cause consumer confusion, even if that party does not compete with the claiming party.

If a claimant proves a claim for trademark infringement, the claimant may recover both damages, including defendant’s profits in certain circumstances, and injunctive relief.

What is unfair competition?

Unfair competition under the federal Lanham Act (15 U.S.C. § 1125) is commonly known as passing off one’s goods or services for another’s. This means when a party tries to pass his goods or services off as affiliated with or sponsored by another. Unfair competition usually involves an element of consumer deception.

One of the benefits of a claim for unfair competition is that you need not have a registered trademark in order to bring the claim. Another benefit of a claim for unfair competition it is often broader than a claim for trademark infringement.

There are two types of theories for unfair competition, one for likelihood of confusion and one for false advertising. An example is that a claim for unfair competition may cover a party’s false or misleading advertising even if the false or misleading ads would not constitute a claim for trademark infringement.

Notably, a claim for unfair competition may be brought under both federal and Florida law. Likewise, as jurisdiction is concurrent, a claim for unfair competition under federal law may be brought in either federal or Florida state court.

What is trademark dilution?

Trademark dilution is the weakening of a famous trademark or service mark that identifies and distinguishes goods or services. 15 U.S.C. 1125(c)(1). Dilution does not depend on the presence or absence of competition between the famous mark’s owner and other parties. Likewise, it does not depend on the likelihood of consumer confusion.

Dilution derives from the premise that some marks are so well recognized that they deserve an additional level of protection beyond limiting them to establishing a likelihood of consumer confusion with another mark. In this vein, dilution seeks to prevent marks that are sufficiently similar to a famous mark, regardless of the goods or services connected to the mark, causing the dilution of the famous mark.

Three common elements are typically required when proving liability for dilution: (1) the diluted mark must be famous or well-known; (2) some protection of the strength of the mark should be gained from a finding of liability for dilution; and (3) actual dilution (not a likelihood of dilution) should be occurring.

What is a copyright?

A copyright in a work arises by operation of law when an original work or authorship is fixed in a tangible medium of expression. “Original” means the author independently created the work (did not copy it from another) and the work possesses at least a minimal level of creativity.

The required level of creativity to merit copyright protection is extremely low. The vast majority of works make the grade easily no matter how crude or obvious.

Originality of a work does not require that the work be novel. The work is protectable even if similar to other works as long as the similarity is fortuitous, not the result of copying.

Copyright protection, however, does not exist for ideas, procedures, systems, processes, principles or concepts. Protection is only available for the tangible expression of these items under what is called the merger doctrine. In other words, an idea cannot be copyrighted, but the expression of the idea may be and others would be entitled to form their own expression of the same idea without infringing on another’s copyright.

A copyright is automatically created when an author or artist creates the work. Registration with the United States Copyright Office is not required to “obtain” a copyright, but is necessary to bring an action in court for copyright infringement.

What does a copyright protect?

A copyright may protect all works of authorship including the following types of works: literary, musical, dramatic, pantomime, choreographic, pictorial, graphic, sculptural, motion pictures, audiovisual, sound recordings, and architectural, among others. 17 U.S.C.’ 102(a). To merit copyright protection, the work must be an original work of authorship fixed in a tangible medium of expression.

“Original” only means that the author created the work independently, the author did not copy it from other works, and that the work possesses some minimal degree of creativity. The required level of creativity is extremely low and even a slight amount will suffice for copyright protection. The vast majority of works make the grade easily as they possess some creative spark regardless of how crude.

Original does not mean that the work must be novel. A work may be original though it closely resembles other works so long as the similarity is fortuitous and did not result from copying another work.

The law of copyright specifically excludes any original work of authorship involving an “idea, procedure, process, system, method of operation, concept, principle, or discovery.” 17 U.S.C. ‘ 102(b). This distinguishes an author’s expression (which is protectable) and the author’s ideas (which are not).

In certain cases, there are so few ways to express an idea, the idea and expression merge. This is called the “merger doctrine” in which case the expressions subsume the ideas such that the expressions do not receive copyright protection because the protection would have to extend to the idea itself.

How is a copyright different from a patent or trademark?

A copyright protects original expression with only a modest amount of creativity required. A patent protects inventions or discoveries and requires that the idea or discovery be novel. Copyright’s requirement for originality, however, is different from a patent’s requirement of novelty. Originality under copyright law only requires that the author have created the work himself or herself and that the author did not copy the work from another author.

Copyrights also are different from trademarks in that trademarks do not protect original expression. Instead, trademarks protect words, phrases, symbols, or designs that identify the source of the goods or services for a consumer to distinguish one party’s product from another’s product. In limited circumstances, a certain design may be entitled to both copyright protection as creative expression under copyright law and trade-dress protection for certain identifying packaging under trademark law.

When is my copyrighted work protected?

Contrary to popular belief, your work as an author is protected by copyright laws immediately upon creation of the work. For example, if you were to write an essay, the essay is protected by copyright law from the moment you finish typing. The key though is that the work must be reduced to a tangible form or medium. A copyrighted work may not just exist in someone’s imagination or through oral expression alone.

What many people believe is that filing for a copyright registration with the U.S. Copyright Office is required before an author has copyright protection. That is incorrect. Registration of a copyright is only required to file a lawsuit for copyright infringement to enforce a copyright, but it is not required to have copyright protection for the author’s work in the first place. Likewise, registration of a copyright also provides for certain benefits when an author must file a lawsuit, including recovery of statutory
damages and attorneys’ fees.

The bottom line is that copyright protection exists for an author by operation of law upon creation of the work.

Must I register a copyright with the government to receive protection?

A copyright registration is not required to own a copyright on the creator’s work – instead, an automatic copyright exists upon creation of the work. Nonetheless, there are substantial benefits to filing for a copyright registration with the U.S. Copyright Office upon initial publication of the work.

Section 412 of the Copyright Act (17 U.S.C. § 412) provides that an award of statutory damages or attorney’s fees is not available to a copyright owner for (1) any copyright infringement in an unpublished work commenced before the effective date of its registration; or (2) any copyright infringement commenced after first publication of the work and before the effective date of its registration, unless the registration is made within 3 months after the first publication of the work.

As a copyright owner, the claims for statutory damages and attorney’s fees are important remedies because a copyright owner’s claim for actual damages or for the defendant’s profits may be insubstantial. Therefore, early registration, while not mandatory, is still important to preserve significant remedies against potential infringers.

I think someone infringed upon or used my copyrighted material. What should I do now?

When someone infringes upon or uses your copyrighted work without your consent, the first thing you want to is assess the registration status of the copyrighted work. This is important for two primary reasons as follows:

First, you cannot bring a lawsuit for copyright infringement until the copyrighted work is registered with the United States Copyright Office. At minimum, you need to have applied for a copyright registration. Fortunately, copyright registrations are relatively easy to obtain and generally considered a “rubber stamp” as long as you fill out the proper form and pay the registration fee.

Second, assessing the timeliness of the copyright registration is important because a timely registration after the copyrighted work’s creation may entitle you, as the copyright owner, to additional favorable remedies, e.g., statutory damages and attorney’s fees, if the owner needs to sue a party for infringement.

Moreover, once you have evaluated the registration status of your copyrighted work, you will want to assess the defendant’s copy against your copyrighted work. The objective is to determine whether the copied work is “substantially similar” to your copyrighted work. This is necessary to prove a case for copyright infringement.

Once you have evaluated the registration status of your work and the substantial similarity with the infringing copy, you will need to determine with your attorney whether to send out a demand letter or whether it is too late for a demand and filing a lawsuit is required.

It is important to note that all lawsuits for copyright infringement must be filed in federal court because the United States District Courts have exclusive jurisdiction over copyright cases under Chapter 17 of the United States Code. Therefore, when hiring a lawyer, it is important to for you to look for a lawyer with experience and competency in federal-court practice to handle your copyright case.

What kind of damages might I receive if someone infringes upon or uses my copyright?

Several types of damages are available if someone infringes upon your copyright.

The first type of damages is called actual damages. This is a claim for you or business’ actual losses. For example, let’s assume that you have a copyrighted book that has generated $500,000 dollars in profits for your business for the last 3 years. If someone improperly copies your book and sells it on their website, causing you to lose $400,000 in annual profits, you can sue that party for the $400,000 in actual losses.

A second type of damages that you may recover is the defendant’s profits that arise from selling the infringing copies. Using the same example as above, this means that if the defendant’s profits are $200,000 from its unauthorized sales of your book, you can recover the defendant’s $200,000 in profits.

A third type of damages is called statutory damages. This type of damages can be quite significant and may range from $750 to $30,000 and may be increased to $150,000 if you can prove the infringement was willful. The key to recovering this type of damages, however, is that the copyright owner must file for a timely registration of the copyright within 90 days of first publication of the copyright.

A fourth type of damages is recovery of attorney’s fees. This recovery is also important in cases where the amount in controversy may be smaller or if only an injunction is at issue. Like recover of statutory damages, recovery of attorney’s fees also depends on a timely copyright registration within 90 days of publication.

In sum, there are varying forms of recovery of damages and attorney’s fees available under the Copyright Act.

What can be copyrighted?

Copyrights protect the following types of works including literary works; musical works; dramatic; pantomime and choreographic works; graphic, pictorial, and sculptural works; motion pictures and audio-visual recordings; and architectural works. 17 U.S.C. 102(a).

Non-exhaustive examples of each type of works are as follows:

Literary worksLiterary works includes magazine and newspaper articles, books, essays, letters, poems, computer software programs, blog posts and other forms of written expression.
Musical worksMusical works include musical notes and sound-recorded music.
Dramatic worksDramatic works include screenplays, television scripts, and stage plays.
Choreographic worksChoreographic works include dances and pantomime performances.
Pictorial, graphic, and sculptural workPictorial, graphic and sculptural works include paintings, photography, sculptures, hand-written drawings, and computer drawings.
Motion pictures and other audiovisual worksMotion pictures and other audiovisual works include movies, television shows, commercials, podcasts,and slideshows.
Sound recordingsSound recordings include songs, instrumental music, speeches, audio books, broadcasts, and sound effects.
Architectural worksAny design plans or sketches for commercial buildings or residences may be protected for their original, non-functional design elements.

Any design plans or sketches for commercial buildings or residences may be protected for their original, non-functional design elements.

What are the advantages of having a limited liability company or LLC?

From a litigation perspective, there are substantial advantages to having your business created as a limited liability company, otherwise known as an LLC.

First, a major advantage of an LLC is the limited personal liability of the LLC’s managers and members as to the creditors of the business. In most circumstances, the business’ creditors cannot sue managers or members for the debts of the LLC.

Second, a manager’s duties to other members are limited to duties of loyalty and duties of care. These are high burdens for a manger to be liable for to another member.

Third, an LLC can limit most of the duties that a manager owes the LLC or its members through a written Operating Agreement.

With the exception of several limitations under the LLC statute, a manager’s duties can be defined or limited further by having the manager and members sign a written Operating Agreement.

In sum, the LLC is an effective, nimble form of business entity that carries many protections when the LLC, its manager, or its members are involved in litigation.

What is a shareholder derivative lawsuit?

A shareholder derivative lawsuit is a legal action filed by an individual shareholder, in the name of the company, to redress wrongs or harms to the company that the Board of Directors or Officers will not address themselves.

Individual shareholders normally have little power to control the day-to-day management of a company. Instead, the shareholders elect a Board of Directors to oversee management. The Board of Directors, in turn, appoints Officers to manage the day-to-day affairs of the company. The Directors and Officers are in charge of protecting the company and its shareholders.

But what happens when the Directors and Officers are themselves harming the company? The Directors and officers will never sue themselves. In such situations, the law allows individual shareholders to file a lawsuit against the Directors and Officers to redress the harm done to the Company. The individual shareholder stands in the shoes of the company and derives his or her right to sue (hence the name derivative) from the rights of the company itself.

Derivative shareholder lawsuits are frequently brought to redress the following types of wrongdoing by the Board of
Directors and/or Officers of a company:

Breach of fiduciary duty
Fraud or other unlawful activity
Self-dealing or greed by insiders
Conflict of interest
Waste of corporate assets
Accounting wrongdoing
Inflated, false, or misleading financial statements
inflated executive compensation
Management or board decisions that expose the company
to harm, violate consumer protection or other laws.

Note, however, that the law imposes numerous and complicated limitations on shareholder derivative actions. As an example, in many states, the individual shareholder must make a pre-suit demand upon the Board of Directors to take whatever action is requested in the derivative lawsuit. If the pre-suit demand is not properly made, the lawsuit may fail unless the futility of a demand is alleged.

Other states follow a different rule and consider the making of a pre-suit demand to constitute a waiver of any right to claim that the Board of Directors has a conflict of interest. In these states, making a pre-suit demand may cause the lawsuit to fail.

In short, the legal rules governing the procedures for derivative lawsuits differ from state to state and are extremely complicated. Before considering any shareholder derivative lawsuit, you should consult an attorney who is skilled and knowledgeable in this area of law.

What is a trade secret?

Trade secrets are any type of formula, method, compilation, recipe, report, list or information that creates independent economic value. If it has such value, it can be a deemed a trade secret if the above is kept reasonably secret from the general public.

If the formula, method, recipe, report, list or other information has that independent economic value and reasonable measures have been taken to keep the above secret, trade secret exists.

One of the more common examples of a trade secret is a business’ customer list. As long as the list is kept reasonably secret, an employer, for example, cannot leave the business’ employ and use the list at a competing company.

Most people don’t typically think of trade secrets as a customer list or other basic information. Instead, they think of a trade secret as the formula for Coke locked up in a safe. That, however, is not the more common example of what a trade secret is. Trade secrets arise out of every day confidential business information and many businesses have one or more trade secrets.

What is needed to bring a breach of contract action?

Well to bring a claim for breach of contract you basically need to have three things.

First you have to have a valid contract. We all know what a written contract means. The contract is still always have to be in writing. Sometimes they’re oral. The basic definition of a contract is a meeting of the minds between two people to agree on some specific thing to be done. That’s the first thing, you have a valid contract.

The next element is a breach; once you have a contract did one side or the other not live up to what they were supposed to do.

Assuming you have that second element, you also need the third element which is damages. In other words, as a result of the breach, did one side or the other suffer damages of some type? If you have all those things: a valid contract, a breach, as well as damages, then you have a potential claim for breach of contract.

What are the implied terms in a contract?

A contract can have two different types of terms:express or implied. Express terms are the ones actually written into the contract. As an example, if a promissory note calls for monthly payments to be made on the first of each month, this is an express term of the contract. Implied terms, on the other hand, are not written in the contract but, rather, implied by law.

As an example, many states recognize that every contract includes an implied covenant of good faith and fair dealing. This means, in general, that the parties agree to act in accordance with reasonable commercial expectations and to treat one another fairly in carrying out their obligations under the contract.

Courts commonly use the implied covenant of good faith and fair dealing when the express terms of the contract are not clear or give unfettered discretion to one of the parties to do, or not to do, a certain act. As an example, a lease may allow for the tenant to sublease a property so long as the landlord gives his or her approval. The lease gives the landlord complete discretion: he can allow the sublease or disallow it.

In this situation, the implied covenant of good faith and fair dealing dictates that the landlord must exercise his or her discretion consistent with the commercially reasonable expectations of the parties and in good faith. He or she cannot act arbitrarily or capriciously but must make thedecision based upon good faith, business reasons.

The implied covenant of good faith and fair dealing can be subject to several limitations, however. Normally, it cannot be applied to contradict the express term of the contract. Likewise, it cannot be applied to create new obligations which the parties did not bargain for. The concept is meant to be a “gap filler” that governs areas that are not clear or are left to the discretion of one party.

The law of contracts is normally governed by the state where the parties live. Not all states recognize the implied covenant of good faith and fair dealing. You should consult a lawyer knowledgeable in the state where you live to gain a complete understanding of how the implied covenant of good faith and fair dealing might apply to your contract.

Who is in charge of a closely held company?

A company owned by only a few shareholders or members is often called a closely held company. These companies are not publicly traded and are often held by families or business partners. Both a corporation and an LLC may be “closely held.”The laws of the state of incorporation will dictate precisely which individuals are in charge of the management of the company.

In Florida, for instance, the Business Corporations Act does not expressly recognize a “closely held” company. Thus, a closely held corporation is governed by a board of directors, who are elected by the shareholders. The board of directors then, in turn, appoints any officers as required by the corporation’s bylaws. That being said, a provision of Florida law (§ 607.0732, Fla. Stat.) allows a corporation with no more than 100 shareholders to execute a “shareholder agreement” to streamline the management of the corporation. For instance, the shareholders can by agreement: eliminate the board of directors; establish rules for making distributions (within certain limits); assign management roles and responsibilities; and otherwise govern the exercise of corporate business.

Other states have different rules governing the management of closely held corporations. Delaware, for instance, has an entire section of its corporate code dedicated to “close corporations,” which by definition have no more than thirty shareholders.8 Del. C. § 342(a). The corporation may be managed by either the shareholders or a board of directors, so long as the choice is set forth in the certificate of incorporation.8 Del. C. § 351.

In contrast to a corporation, LLCs have fewer structural requirements. LLCs, as business entities, were originally modeled after partnerships. As a
result, management of an LLC is typically vested in all of the owners of an LLC. The owners in charge are, in most jurisdictions, termed “manager-members,” in contrast to other owners, who are just called “members.”A non-member may also be designated as a “manager,” and the powers awarded to “manager-members” and “managers” are similar. A “manager-member” or a “manager” is usually designated in the LLC’s operating agreement, which in most LLCs governs the relationship between the members. In most jurisdictions, LLC laws do not make any distinction between LLCs based on the number of members.

What is a closely held company?

There is no precise definition of a closely held company. Usually, a “close corporation” or a “closely held” business is one with only a handful of owners. Oftentimes, a closely held company is one owned by a family or by a few partners. Most small businesses are closely held companies, but the size of a company does not determine whether it is “closely held.”Even some large, multi-billion dollar enterprises like Publix Super Markets, Cargill, Inc., and Chick-fil-A are designated by some as “closely held.”The shares or membership units are not publicly traded, and the company is not registered with the SEC.

Different jurisdictions may have varying definitions of what exactly constitutes a closely held company. Florida, for instance, does not recognize any distinction between a “corporation” and a “close corporation.”Nevertheless, in corporations with fewer than 100 shareholders, Florida law allows the shareholders to change the corporate structure by contract.See § 607.0732, Fla. Stat. Delaware, by contrast, has a whole section of its corporate code devoted to “close corporations,” which it defines as corporations with fewer than thirty shareholders. While not explicitly labeled as “closely held,” most LLCs are, in fact, closely held companies. LLCs are modeled after partnerships, where a limited number of individuals share in the ownership and management of the business.

It is important to check the law of the state of incorporation to determine whether designating an entity as “closely held” has any legal significance. In Florida, for instance, the courts have treated closely held LLCs no different than LLCs with many members. Other states may impose additional duties between members in a closely held LLC.

Note also that the IRS has its own definition of a “closely held corporation” for tax purposes that is different from the definition used under most state laws. The IRS generally defines a closely held corporation as a corporation where more than half of the corporation’s stock is owned by five or fewer individuals during the second half of a calendar year.

What are some red flags to watch for when family or friends want to go into business together?

Well, we’ve all heard of stories, sometimes, unfortunately, horror stories when family members or friends go into business together and some of the red flags that you may have in the closely held company context with either family members or friends are one, that it’s very difficult for the management or the majority owner to be objective in reviewing and working with other family members or friends, because of that relationship and sometimes in the workplace, it’s very healthy to be able to speak objectively at an arms’ length with those that you work with. Sometimes that familial or that friendship relationship get in the way of that and can cause problems either with harmony or other more severe problems when it comes to financial repercussions within the company itself.

Another issue with respect to working with family members as well with friends is when it comes to compensation and discipline. When it comes to compensation, there can usually be a lot of jealousy that’s spread, you know, with other family members, no different than siblings would be when they’re fighting over a toy when they’re younger, so that sort of will reach a different level when they’re adults working in a closely held company together and sometimes that jealousy can be harbored when family members or friends are working together. What you want to do is again, have a clear written agreement that defines the rights and it becomes even more important or pronounced in the setting in which you have family members of friends working together because it will help clearly define the rights and put less of a notice on the party who is needing to take action, maybe sometimes adverse to the family member or friend.

What are some common disputes in closely held companies?

The owners of closely held companies often get along well, at least while the money is flowing. When trouble arises, however, it frequently stems from one of these situations:

1. A lack of a written agreement.

During the infancy stages of many new businesses, the owners often begin “on a handshake.” Everybody trusts everybody at the beginning, and nobody sees the need to reduce anything to writing or hire a lawyer to draft a shareholder, operating, or partnership agreement.

These owners do a great job of predicting the success of their new product, idea, or business plan, but they do a lousy job of predicting the problems that success can bring. Years later, these owners often find themselves in disputes, usually over money or control of the business. Often no written agreement exists to give direction to the owners, and each owner may have a different memory of the past.

A written agreement between the owners often reduces ambiguous rights and duties, more clearly defines the owners’ ownership stake, and guides the management and direction of the company.

2. Owners wearing too many hats.

Another common source of conflict between the owners of a closely held company is the owners wearing too many hats, i.e., playing too many roles. For example, the owners of closely held companies can be required to play different roles including majority owner, minority owner, president, manager, co-manager, managing-member, operator, treasurer, board member, supervisor, investor, and employee. These are each different roles with different (and sometimes conflicting) duties and responsibilities.

What happens, for example, when the 51% owner, who is also the manager of the business, decides to fire the 49% owner, who is also an employee? Does the 49% owner have a right to a job at the company? Can the 51% owner set everybody’s salary, including his or her own, regardless of whether the 49% owner agrees or disagrees?

This again re-emphasizes point one, which is the importance of a written agreement. With many roles, the many varying roles that owners play in a closely held company, defining those roles and expectations is critical to reducing disputes.

Can a minority owner of stock in a closely held company sell his or her stock?

One of the common problems in a closely held company is that a minority owner’s stock is usually illiquid. This means that a minority owner of stock in a closely held company cannot simply call his or her broker and sell. In other words, there is no public market for the stock.

Moreover, even if there were a market for the stock, minority shares often have little value and lack any contractual rights that come with the shares. This is because a minority owner often has little power over management of the company and is not automatically entitled to distributions.

In addition, the controlling owners of a closely held company can often take advantage of minority owners by paying themselves salaries and bonuses as employees that drain the company from any distributions that would otherwise flow down to the minority shareholder.

Separate from the lack of a buyer’s market for minority shares, another hindrance to selling shares is that owners often have written agreements that place severe restrictions on the ability to sell the stock without the controlling shareholders’ approval. Thus, minority owners frequently find themselves in the position of being part-owner of a multi-million dollar business that provides them with few options to be bought out of their shares and no income from the shares.

This puts an onus on the minority owner to make sure to negotiate a fair shareholder or operating agreement with the other owners before investing in a closely held company.

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